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Simplified Micro Devices has a contract to sell 10,000 mousetraps to the Department of Defense (DOD). The mousetraps will sell for $5.50 apiece. However, there is a 20 percent probability that total expenses will be $40,000 and an 80 percent probability that total expenses will be $50,000. What is the expected pretax income for the firm's DOD sales?

$7,000

$48,000

$55,000

None of the above.

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